Ordinance or Law Coverage

Will your homeowners insurance policy cover building code upgrades?

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Ordinance or law coverage

Sometimes referred to as “law and ordinance coverage,” this additional endorsement to your homeowners insurance policies protects you in case local law or building codes require updates to your property. Though it is commonly a part of commercial property coverage, it is also an important part of homeowners insurance.

Read on to find out more about how this coverage can help bring your home up to code after a covered loss.


Ordinance or law coverage — table of contents:

  1. What is law and ordinance coverage?
  2. How does ordinance or law coverage work? 
  3. How much does ordinance or law coverage cost?
  4. Do I need ordinance or law coverage?



What is law and ordinance coverage?

Ordinance or law insurance coverage pays for the additional costs associated with upgrading your primary dwelling or other structures to comply with local building codes or ordinances. Usually, these building upgrades must be implemented after a partial or total loss to your property caused by a covered peril. This is especially true if you own an older home. Standard homeowners policies don’t often cover such upgrades. As such, without this added coverage, you would be on the line for the extra costs associated with bringing your home up to code. 


What kinds of code changes does ordinance or law insurance cover?

Building code changes usually have to do with construction practices and the materials in building your home. Plumbing and the electrical wiring systems commonly require upgrades. States and municipalities update building regulations for a number of reasons, be it for safety or environmental purposes. If you live in a state prone to earthquakes, windstorms or hurricanes, your area may adopt building practices to ensure homes are better able to withstand such events.

As long as your insurance company considers damages to be a covered loss, the increase in cost to help you comply with local ordinances will be covered by ordinance or law coverage.



How does ordinance or law coverage work?

This added insurance coverage covers the cost of getting your home in alignment with current building codes. Before rebuilding or repairing your home after a covered loss, your city or state may require upgrades. These upgrades can cost significantly more than the limit for your replacement cost listed on your homeowners policy.

Ordinance or law coverage steps in to help pay for these upgrades through the following means:

  • A loss to the undamaged portion of the building: Sometimes local building codes require that an entire structure be demolished and rebuilt if a certain percentage is seriously damaged. This part of the policy pays for the loss of value from this portion of the home. 
  • The increased cost of construction: This portion of the coverage helps to account for an increase in construction costs due to the added work necessary to bring your home up to code.
  • Demolition costs: Covers the tear-down costs as well as those associated with the removal of debris. 



How much does ordinance or law coverage cost?

The cost of ordinance or law coverage is relatively reasonable, averaging $66 extra per year for $40,000 worth of coverage. Keep in mind, however, that these rates can vary depending on where you live. Below is a breakdown of the average yearly cost by insurance carrier for a variety of coverage levels.


Insurance ProviderAverage Premium (No coverage)$10,000 Limit$20,000 Limit$30,000 Limit$40,000 Limit
Liberty Mutual$1,357$1,364$1,364$1,492$1,492
State Farm$1,302$1,302$1,302$1,340$1,340



Do I need ordinance or law coverage? 

Like all types of insurance, ordinance or law coverage can be incredibly helpful in situations that you don’t see coming. If you own an older home, this coverage add-on can be a wise choice, as code upgrades can be costly. Consult your insurance company to see if this coverage is available and if it could be a good option for you.

However, if you are worried about the potential costs law and ordinance coverage could add to your homeowners policy, you may want to consider shopping around. The Zebra allows you to compare homeowners quotes side by side to find an insurance policy to suit your needs.


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Ross Martin
Ross Martin LinkedIn

As a licensed insurance agent, Ross is responsible for researching and writing about all matters related to insurance. He has a background in writing and education, as well as a master's degree from Royal Holloway, University of London. He has been quoted by CNET, iDriveSafely.com and Kin Insurance.